In 2019, European equities remained buoyant throughout the year, with ex UK Index MSCI Europe recording up to 20% profit in sterling pounds, while Stoxx 600 just hit a record high of 20.5% profit in a year, despite a slowdown in economic growth and political uncertainty.
Besides bringing you the Ladbrokes promo code, this article takes a closer look at the Business outlook for Europe in 2020.
GDP Forecasts
Though the European economy has continued to grow for the last seven years, experts at the European Commission autumn forecast suggest that it will grow at a slower rate than what was earlier predicted. However, the economy is expected to continue expanding this year and in 2021.
In 2020 and 2021, experts believe the GDP will rise by 1.4%, revising the previous forecast figure of 1.6%. However, the ECB (European Central Bank) reduced its deposit rate to -0.5% from -0.4% last September before reintroducing quantitative easing later in November.
With Christine Legarde as the ECB president, everyone is waiting to see what she’ll do for the monetary policy. Europe’s chief economist Andrew Kenningham noted that he expects the policy to stimulus further down the line.
It will take a year for the bank’s strategic review to be completed, so any policy decisions must aim for inflation of less than 2% in the meantime. According to Lagarde, the bank’s inflation forecasts are off the target even for 2022. Speaking of economic growth, Kenningham believes it will be sluggish in the Eurozone until mid-2020, recovering slower than the ECB forecasts.
Equities
Taking a look at the equities markets, it’s clear that the positive managers in the region are becoming selective, as growth Vs. value debate remains heated. Fidelity Global manager, Jeremy Podger has identified valuable opportunities in the region. Podger was quick to admit that selectivity is key in European equities, so it’s essential to avoid expensive defensives. That’s why they’re finding incredibly unique businesses and value situations in the region than anywhere else.
The Hermes Investment Management head of European equities, James Rutherford, also says she believes there’s still a good potential to rally for value. That’s despite growth stock valuations ranging at premiums that have never been witnessed over the last decade. That means annual earnings growth for many value stocks should start to improve in 2020. However, BlackRock Greater Europe Investment co-manager Stephan Gries is already warning against buying value stocks.
